Will Sony Be Sony Again?

The past several years have been really tough for Sony Corp. The Japanese electronics giant was mired in losses for years, while Samsung Electronics Co. and Apple Inc. dominated the growing smartphone market, which could have been lucrative for Sony.

Sony India

But finally, Sony, the brand once synonymous with innovative gadgets, is starting to see improvements in its earnings. The company said Thursday that it posted a net profit of Y3.48 billion ($35.38 million) in its fiscal first quarter ended June, reversing a loss of Y24.64 billion in the same period a year earlier. Its revenue rose 13% to Y1.712 trillion.

Sony’s return to the black was more or less in line with analysts’ expectations for a net profit of Y4 billion according to a poll by Thomson Reuters.

Sony attributed the quarterly profit to brisk sales of its Xperia-branded smartphones and strong results at its financial subsidiary.

Investors are closely watching Sony’s earnings this fiscal year to identify real signs of recovery. Sony posted its first annual net profit in five years for the last fiscal year ended in March, but the profit was due in part to one-off gains on asset sales.

Under Chief Executive Kazuo Hirai’s leadership, Sony has slashed operational costs and implemented restructuring measures involving job cuts. Still, while Sony has some highly competitive operations like image sensors used in cameras, the company’s effort to turn around its core electronics business is far from over, and the company has yet to emerge as a major threat to Samsung and Apple in the market for smartphones and tablets. Samsung and Apple account for roughly half of all smartphones sold today, and they share most of the industry profits.

Amid lingering concerns about Sony’s future, U.S. hedge-fund investor Daniel Loeb, whose firm owns about 7% of Sony shares, has proposed that the company list part of its movie and music businesses.

For the full year to March, Sony said it will maintain its profit forecasts for a net profit of Y50 billion, but raised its revenue forecast by 5% to Y7.9 trillion.